Demand has been driven by employment growth since the second half of 2021, according to a study by Credit Suisse. According to experts, companies that hesitated to rent space during the pandemic could not wait any longer. “Tenants felt they needed access to certain places so they wouldn’t be left empty-handed.”
Looking at various regions, it is seen that there is a decrease in supply quotas, especially thanks to Zurich and Lausanne. According to CS in Zurich, restrained expansion of the area over the years has helped reduce the supply rate, while strong demand in Lausanne has absorbed continued brisk construction activity. Basel, on the other hand, has not coped well with the high construction activity in recent years and currently has the second highest supply rate after Geneva.
A new reality after the pandemic, the home office. Because, according to CS, occupancy rates remained well below pre-pandemic levels, even after many employees returned to the office. The vast majority of companies now offer flexible working models in order to remain attractive as employers.
Companies have now given up on their reluctance to lease new buildings. However, the role of the office has turned into a place of communication and shopping, and with it, the demands of the tenants for the quality of the properties have increased. The demand for well-positioned and modern spaces is increasing.
Experts expect the office real estate market to stabilize somewhat in the coming year. Demand is likely to drop slightly due to the economic slowdown, but will remain generally positive. Therefore, the temporary high came at just the right time.
Thanks to falling vacancies and rising final rents, the market can now face the expected decline more strongly.
Nor is there a threat of overexpansion of the field in the next twelve months, as investments approved last year are 11 percent below the long-term average.
The only cloudiness CS can see is the extremely high level of supply quotas. More and more areas are starting to show marketing difficulties, especially in the suburbs of major centres. This trend continues, and conversions are easier said than done. For this, a large number of parameters had to be met and the conversion costs had to be proportional.
(SDA)